Facebook Shares of owner Meta Platforms Inc plunged more than 20% late Wednesday after the social media company released a weaker-than-expected forecast, blaming Apple‘s privacy changes and increases competition for users from rivals like TikTok.
Facebook’s global daily active users decreased from the previous quarter for the first time, to 1.929 million from 1.930 million.
Meta said it faced the impacts of Apple Inc’s privacy changes to its operating system, which have made it harder for brands to target and measure their ads on Facebook and Instagram. He also cited macroeconomic problems such as supply chain disruptions.
The 18-year-old tech giant, which is also facing pressure from platforms like TikTok and GoogleYouTube said it expected revenue growth to slow in the coming quarter due to increased competition for user time and a shift in commitment to features like its Reels short video offering, which generate less revenue.
Facebook reported 2.91 billion monthly active users in the fourth quarter, showing no growth compared to the previous quarter.
The post-close plunge in Meta shares vaporized $200 billion of its market value, while peers Twitter Inc, Snap Inc and Pinterest Inc lost another $15 billion in value.
Shares of Alphabet Inc, which posted record quarterly sales that beat expectations on Tuesday, fell nearly 2%.
Meta, which owns the world’s second-largest digital ad platform after Google, had previously warned that its advertising business faced “significant uncertainty” in the fourth quarter.
Meta CFO Dave Wehner told analysts on a conference call that the impact of Apple’s privacy changes could be “on the order of $10 billion” by 2022. Apple’s changes to its operating software provide users the option to prevent apps from tracking their online activity for ads, making it harder for data-dependent advertisers to develop new products and learn about their market.
Meta forecast first-quarter revenue in the range of $27 billion to $29 billion. Analysts had expected $30.15 billion, according to IBES data from Refinitiv.
“Clearly there are many significant hurdles ahead as Meta faces stiff new competition for ad revenue like TikTok, and as it faces ongoing ad targeting and measurement challenges from Apple. iOS changes,” said Insider Intelligence analyst Debra Aho Williamson. The company’s total revenue, most of which comes from ad sales, rose to $33.67 billion in the fourth quarter from $28.07 billion a year earlier, beating analysts’ estimates. $33.40 billion, according to IBES Data from Refinitiv.
“I am encouraged by the progress we made last year in several important growth areas such as Reels, Commerce and Virtual Reality, and we will continue to invest in these and other key priorities in 2022 as we work to build the metaverseCEO Mark Zuckerberg said in the earnings release.
On Meta’s earnings call, he said that competition for users was a factor impacting the business, mentioned short video app TikTok by name, and emphasized Meta’s commitment to serving young adults.
Net loss for Meta’s Reality Labs, the company’s virtual and augmented reality business, was $10.2 billion for the full year of 2021, compared with a loss of $6.6 billion a year earlier. It was the first time the company had broken out this segment in its results.
Zuckerberg had previously warned that the company’s investment in this area would cut 2021 operating profit by $10 billion and be unprofitable “at any time in the near future.” “Reality Labs posted revenue of around $2.3 billion in 2021. The company has not released sales figures for its Quest virtual reality headset. The company said on Wednesday that it would change its stock listing to “META” this year, the latest step in its rebranding to focus on the metaverse, a futuristic idea of virtual environments where users can work, socialize and play.
Meta did not comment on the price of a deal with Roundhill Investments, which said in January it would stop using the symbol for its Roundhill Ball Metaverse ETF.
The tech giant, which changed its name in October to reflect the goals of its metaverse, is betting that the metaverse will be the successor to the mobile Internet. advertising platform,” said Flynn Zaiger, CEO of social media agency Online Optimism.
“Investing in Meta now feels more like a commitment to believing that the metaverse will replace much of the Internet consumer experience today.” Meta’s rebranding comes at a time of increasing scrutiny from lawmakers and regulators over allegations of anti-competitive conduct and the impacts of how it handles harmful or misleading content on its Facebook and Instagram platforms.